Exclusive: Obama To Hit McCain On Keating Five

October 5, 2008 / 11:15 PM
/ The Politico

Sen. Barack Obama (D-Ill.) on Monday will launch a multimedia campaign to draw attention to the involvement of Sen. John McCain (R-Ariz.) in the “Keating Five” savings-and-loan scandal of 1989-91, which blemished McCain’s public image and set him on his course as a self-styled reformer.

Pushing back against what it calls McCain's “guilt-by-association” tactics, the Obama campaign is e-mailing millions of supporters a link to a website, KeatingEconomics.com, which will have a 13-minute documentary on the scandal beginning at noon Eastern time on Monday. The overnight e-mails urge recipients to pass the link on to friends.

The Obama campaign, including its surrogates appearing on radio and television, will argue that the deregulatory fervor that caused massive, cascading savings-and-loan collapses in the late ‘80s was pursued by McCain throughout his career, and helped cause the current credit crisis.

Obama-Biden communications director Dan Pfeiffer said: “While John McCain may want to turn the page on his erratic response to the current economic crisis, we think voters will find his involvement in a similar crisis to be particularly interesting. His involvement with Keating is a window into McCain’s economic past, present, and future.”

Obama’s offensive comes after McCain’s running mate, Alaska Gov. Sarah Palin, spent two days telling voters, donors and reporters that Obama showed poor judgment in his relationship with the former radical William Ayers.

McCain’s campaign has vowed to make a major issue of Obama’s Chicago relationships in coming days, with a senior McCain official telling Politico that they are “the vehicle that allows us to question Obama’s truthfulness about his past and his plans for the future.”

The McCain campaign also plans to invoke money launderer Tony Rezko. Officials say they will not bring up Obama's former minister, the Rev. Jeremiah Wright, because McCain has forbade his campaign from using that as an attack. But the officials said outside groups supporting McCain might highlight Wright.

Responding to the Keating blast from the past, a Republican official said the Obama team seemed "frantic" at "the mere mention of the word 'Ayers.'"

“The fact that the Obama team is recycling this old garbage 24 hours after Bill Ayers entered the race is a testament to how worried the Obama camp is of an unfettered airing of his associations," the official said. "Obama is a clever enough politician to know that his unexplored relationships with terrorists and felons are a serious liability in a race this close.”

The Obama website says: “The current economic crisis demands that we understand John McCain's attitudes about economic oversight and corporate influence in federal regulation. ... The Keating scandal is eerily similar to today's credit crisis, where a lack of regulation and cozy relationships between the financial industry and Congress has allowed banks to make risky loans and profit by bending the rules.”

In 1991, the Senate Ethics Committee cleared McCain of corruption charges but cited him for “poor judgment” in meeting with federal regulators on behalf of Charles H. Keating Jr., a political patron who went to prison for fraud in connection with the collapse of the California-based Lincoln Savings and Loan Association, which at the time was one of the biggest financial failures in the nation’s history.

A trailer for the campaign-produced documentary features William K. Black, a former bank regulator who McCain met with in the Keating case, saying: “The Keating Five involved all the things that have brought the modern crisis. Senator McCain has not learned the lesson, and has continued to follow policies that are going to produce a disaster.”

The Obama website hasnews clips and a narrative explaining the scandal and McCain’s involvement for voters and reporters.

The Keating episode took a searing toll on the senator and his wife, Cindy. Robert Timberg, in his 1999 biography “John McCain: An American Odyssey,” wrote that the trouble began with the senator “carelessly choosing his friends.”

“McCain had stumbled into a scandal of immense proportions,” Timberg wrote. “Charles Keating, it turned out, had built his financial empire on the life savings of elderly retirees, men and women who watched helplessly as their dreams were snuffed out along with the assets of Keating’s Lincoln Savings and Loan Association.

“The story was complicated, but the press found a tag line that simplified it. McCain and four other senators with ties to Keating were dubbed ‘the Keating Five.’ The label stuck, imputing to all the same degree of guilt even though it soon became evident that at least two, McCain and former astronaut John Glenn of Ohio, were far less culpable, if they were culpable at all.”

Rep. Rahm Emanuel (D-Ill.), a close Obama adviser who is the fourth-ranking House Democratic leader, brought up McCain’s association with Keating on CNN’s “Late Edition” on Sunday. “John McCain got admonished by the Senate Ethics Committee for that,” Emanuel said.